Participation Agreement SIDOR/YLOPA
Exhibit 10.1
▇▇▇▇▇/YLOPA
Between Siderúrgica del Orinoco (▇▇▇▇▇), C.A., commercial corporation registered under the commercial record of the judicial and Federal District and Miranda State, on April 1, 1964, under number 86, volume 13-a, which registration was published in the Municipal Gazette of the Federal District no. 11.256 on April 8, 1964 and whose articles of incorporation were modified and restated in the ordinary shareholders meeting number 128 on April 29, 1999 and recorded in the first commercial register of the Judicial and Federal District and Miranda State in volume 128-a pro, number 67 of the year 1999 and later modified by the shareholders meeting no. 131, on March 23, 2000 and registered in the first commercial register of the Judicial and Federal District and Miranda State, on March 30, 2000, under number 37, volume 52-a-pro of year 2000, hereby represented by its Executive President, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Argentinean, of legal age, resident in Caracas and carrying identification number E-82.279.736 and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Venezuelan, of legal age, resident in Caracas and carrying identification number 1.728.678, both duly authorized to execute this document pursuant to the Act of the Managing Board of ▇▇▇▇▇ dated March 14, 2003 and the Act of the Shareholders Meeting dated June 20, 2003; and YLOPA- Serviços de Consultadoria Lda, company located in Portugal (“YLOPA”, and together with ▇▇▇▇▇, the “Parties”), represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇, of Argentinean nationality and legal age, resident in Buenos Aires, Argentina, carrying passport number ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, of Argentinean nationality and legal age, resident in Buenos Aires, Argentina, carrying passport number ▇▇▇▇▇▇▇▇▇, duly authorized to carry out this transaction pursuant to a power of attorney dated February 21, 2003; it has been agreed to execute this Participation Agreement (with its Annexes, the “Contract”) which has been based on the following preliminary considerations and ruled by the following clauses.
Preliminary Considerations
WHEREAS, ▇▇▇▇▇ has as an objective to constitute, administer, manage, direct and exploit the steel business, directly or through its own companies, or other persons, public or private. In this way, it carries out the respective agreements and obtains the respective concessions to carry out the rest of the pertaining acts that constitute the practice of the industry and commerce in any of its fields, without any limitation, carrying the particular tasks of exploration, transformation of substances such as iron and steel, fully or semi- manufactured derived from the previously mentioned material, storage of goods and the provision of the necessary services to carry out the activities previously mentioned such as the promotion of other companies that have as an objective to carry out similar activities as the ones previously mentioned, and associate with legal and non-legal entities, and in general, to carry out the other operations, contracts and acts following the terms of commercial law which could be necessary or convenient for carrying out the above mentioned (the “Purpose of the Company”).
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WHEREAS, in the stated date, ▇▇▇▇▇ and the Venezuelan Corporation of Guyana (the “CVG” and together with YLOPA, the “Participants”) have entered into a Participation Agreement (the “Participation Agreement with CVG”).
WHEREAS, the Participants have agreed to participate in the eventual positive or negative revenue of the ▇▇▇▇▇ operations under compliance of the Articles of the Company, under the conditions and terms contemplated in this Contract, and subject to the derived limitations of the financial restructuring agreements among ▇▇▇▇▇, its financial creditors, and the Venezuelan state, including without limitation, the established limitations in Clause 3.1(A) and 3.1(B)(I), (II), (III), and (IV) (this last case refers to the payment of dividends) of the present Contract and in the second paragraph of the clause 6.1 of the present Contract.
The Parties have agreed to execute this Contract in conformance with articles 359 and the following ones in the Commercial Code.
First Clause
Definitions
For purposes of this Contract, the following terms will have the following meanings.
“Working Capital” means with respect to each Annual Report the result of (a) the change in the current fixed accounts (excluding cash and transferable titles) for such Annual Report, minus (b) the change in the current liabilities (excluding long term policies that would expire in the short term) for such Annual Report, plus (c) the change for such Annual Report in capital expenses utilized for spare parts and inventories including in the fixed assets, including and without limitation, lamination cylinders.
“Certificate” means a certificate substantially in the form of Annex A of the present Contract.
“Certificate of Participation” means a certificate substantially in the form of Annex B of the present Contract.
“Contract of ▇▇▇▇▇’▇ Banking Debt” refers to the contract titled Amended and Restated Consolidated Refinancing Agreement signed on March 31, 2003, between ▇▇▇▇▇ and a number of financial institutions.
“Contract of Debt with the Republic” means the contract titled “Amended Debt Contract” on March 31, 2003, between ▇▇▇▇▇ and BANDES.
“Dollars” or “US$” refers to the legal currency of the United States of America.
“Debt with the Republic” is the indebtedness documented in the Contract of Debt with the Republic.
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“Business Day” refers to a day that is not Saturday, Sunday or holiday, in which the banks could carry out its normal banking and/or exchange transactions in Caracas, London, and New York.
“EBITDA” means, with respect to any period and calculated over a Trimester Base (as defined in the Contract of Debt with the Republic), the sum (determined over a consolidated base in accordance with Venezuelan GAAP, calculated in bolivars and subsequentially converted to dollars at the average exchange rate for such period) of:
(a) the consolidated operative profit of ▇▇▇▇▇ and its subsidiaries for such period, as expressed in the profit sheet and consolidated losses of ▇▇▇▇▇ and its subsidiaries for such period; plus
(b) so long as they have been deducted for the determination of such operational profit for such period, the sum of:
| (i) | depreciation |
| (ii) | amortization |
| (iii) | any other non-monetary charge (including adjustments due to inflation over the initial inventory including the determination of cost of sales, reserves for non-performing accounts and for contingencies derived from lawsuits and the non-monetary effect of the sale of fixed assets), as long as those non-monetary charges do not represent accrued amounts for the disbursement of cash in any other period |
| (iv) | ▇▇▇▇▇’▇ total payments for workers’ compensation due to layoffs |
| (v) | the taxes included in the operating profit |
| (vi) | non-monetary charges in relation to pension plans, plus, |
(c) the total amount of income as ▇▇▇▇▇’▇ interests and its subsidiaries during that period, as reflected in the balance sheet of ▇▇▇▇▇ during the mentioned period.
“Indebtedness” is defined in accordance to the Contract of Debt with the Republic.
“Fiscal Year” refers to the fiscal year of ▇▇▇▇▇ and its subsidiaries, which starts on January 1st and ends on December 31st of each calendar year.
“Closing Date” is defined in accordance to the Contract of Debt with the Republic.
“Capital Expenses” means, for any Person and for any period, the sum, without duplication, of the following concepts (a) all of the expenses (other than payments for
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spare parts and inventory included in the fixed assets, including and without limitation, lamination cylinders) incurred directly or indirectly, by such Party or any of its subsidiaries during the previously mentioned period for equipment, fixed assets, property or improvement of such, or to replace or to substitute or to add to the previously mentioned and which according to Venezuelan GAAP have been or should be reflected in the consolidated financial statements of the respective Person, such as additions to the properties, factories or equipments; or that have a useful life of more than one year; plus (b) the total sum of all related expenses with all of the capital investment in its subsidiaries, carried out directly or indirectly for such Party or any of its subsidiaries, according to the already established in Clause 10.25(e) of the Contract of Debt with the Republic, during such period; plus (c) the capital sum of all of the Indebtedness (including financial leasings which have been capitalized) incurred or assumed in relation to the previously mentioned expenses or capital investments.
“Person” means any physical or judicial person, public limited company, collective company, consortium, limited partnership, association without legal status, government or any dependence or political subdivision of this or any other entity of similar nature.
“Venezuelan GAAP” refers to the generally accepted accounting principles in Venezuela.
“Tranche A Loans” has the meaning established in the Contract of ▇▇▇▇▇’▇ Banking debt such as “Tranche A Loans”.
“Results of ▇▇▇▇▇’▇ Operations” refers to any period, the positive or negative sum (determined in consolidated form in conformance with Venezuelan GAAP and calculated in bolivars converted to dollars based on the average exchange rate during the stated period) and without duplication, of: (a) consolidated EBITDA of such period, minus, (b) as long as it has not been previously deducted when calculating the EBITDA, the total amount actually paid by ▇▇▇▇▇ in cash during the mentioned period with charges to the Capital Expenses (excluding financial expenses with the funds derived from Indebtedness or any emission of investment in Securities); plus (minus) (c) deductions (or additions) in the consolidated Working Capital for such period; plus (d) as long as it has not been previously included in the EBITDA calculation, the aggregate amount of all the tax refund received by ▇▇▇▇▇ during the mentioned period, minus (e) the aggregate amount of all of the optional anticipated payments optional to the Indebtedness permitted and conforming to the Contract of Debt with the Republic carried out during such period and the aggregate amount of all of the payments regularly programmed to the capital and interests of the Indebtedness permitted in accordance with the Contract of Debt with the Republic carried out during such period (except with respect to any revolving credit facility without causing an equivalent reduction in the agreements among those facilities) including banking commissions and similar ones, minus (f) in the case that under the Contract of Debt with the Republic there is an existing and continued event of default, the aggregate amount of the capital payments and expected interests due and not paid, minus
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(g) in the measure that they have not previously been deducted in EBITDA calculations, the aggregate amount of all payments in cash due to workers’ compensations, layoffs, or pension funds carried out by ▇▇▇▇▇ during this period, and minus (h) the aggregate amount of all of the taxes on top of rent in cash paid by ▇▇▇▇▇ during this period, minus (i) the aggregate amount of all of the taxes imposed to the assets paid by ▇▇▇▇▇ during this period, minus (j) the aggregate amount of all of the tax withholdings paid by ▇▇▇▇▇ during this period, minus (k) the aggregate amount of all of the restructuring expenses paid by ▇▇▇▇▇ during this period, minus (l) the aggregate amount of all of the cash payments made by ▇▇▇▇▇ to Amazonia during this period according to the reimbursement of expenses contract in force at the Closing Date and the aggregate amount of expenses paid by ▇▇▇▇▇ to Amazonia according to Clause 10.21 of the Contract of Debt with the Republic, for the payment of a number of operating legal expenses and taxes incurred by Amazonia, minus (m) the amount required to ensure that the final available cash (excluding the aggregate amount of Performance of ▇▇▇▇▇’▇ Operations (if positive), with respect to the previous Fiscal Year, which have been deposited in the account substantially in the form of Clause 5.1(b) of this Participation Agreement and the Participation Agreement with CVG), after giving pro forma effect to the payment of the Results of ▇▇▇▇▇’▇ Operations to the participants (if positive), is twenty million dollars (US$20,000,000).
“Subsidiary” means, in relation to a Person, any other Person whose absolute majority (more than 50%) of its capital or of its voting shares are in that moment direct or indirect property of such Person or of one or more of the Subsidiaries of such Person or controlled by another Person or controlled by one or more of the Person’s Subsidiaries.
“Average Exchange Rate” means with respect to any period, the sum of the official and daily exchange rate (or, if an official exchange rate does not exist, the daily exchange rate based on the market or of reference) published by the Central Bank of Venezuela or its successor for every Business Day of such period divided by the number of Business days in this period.
“Securities” will have the same meaning as the one expressed in the Contract of Debt with the Republic.
Second Clause
Contributions of YLOPA to the Account
Through the present Contract, YLOPA will contribute to ▇▇▇▇▇ a credit for the amount of six million and six hundred thousand dollars (US$6,600,000) against ▇▇▇▇▇, according to the stipulated terms in the contract titled “Debt Purchase and Sale Agreement” dated March 31, 2003, among ▇▇▇▇▇, YLOPA and the other identified parts in such contract, which credit is hereby annulled as a result of this agreement.
The rights of YLOPA are derived from the present Contract and will also be stated under the Participating Certificate issued under the name of YLOPA, in the form included as Annex B of the present Contract.
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Third Clause
Participation in the Results of ▇▇▇▇▇’▇ Operations (positive or negative)
3.1. Participation of YLOPA. Subject to Clause 3.2, YLOPA will have the right to participate in the eventual Results of ▇▇▇▇▇’▇ Operations (positive or negative) under the following terms and conditions:
(A) If any of the Tranche A Loans is outstanding, in the hundredth and twentieth day (120) following the last day of each Fiscal Year, starting with the Annual Report that finished on December 31, 2003, ▇▇▇▇▇:
(I) will send YLOPA the Certificate relative to such Annual Report, signed by the Financial Director of ▇▇▇▇▇, and
(II) will utilize one hundred percent (100%) of the Results of ▇▇▇▇▇’▇ Operations, which correspond to said Annual Report (as long as they are positive) in order to pay in advance the capital of the Tranche A Loans as it has already been established in the Contract of ▇▇▇▇▇’▇ Banking Debt, until an equivalent total sum of eleven million dollars (US$11,000,000) of the Results of ▇▇▇▇▇’▇ Operations which correspond to the Annual Report (as long as they are positive) as well as all of the previous Annual Reports that end after December 31, 2002 have been utilized to anticipate payments of Tranche A Loans in accordance to the description in this clause (A)(II).
(B) As long as (x) a total amount equivalent to eleven million dollars (US$11,000,000) of Results of ▇▇▇▇▇’▇ Operations corresponding to the Annual Report (as long as they are positive) and to all of the previous Annual Reports that finalize after December 31, 2002 have been utilized to make payments in advance of the Tranche A Loans conforming to the already substantially in the form of section (A)(II), and (y) all of the capital and interest payments from Tranche A Loans scheduled for June 30, 2004 have been made, then:
(I) On June 30, 2004 and the one hundredth and twentieth day (120th), which follows the last day in the Annual Report 2004 and the Annual Report in 2005, in the manner that Tranche A Loans, which continue to be outstanding, ▇▇▇▇▇ will pay in advance the outstanding capital balance of the previously mentioned Tranche A Loans equivalent to five per cent (5%) of the total amount of: (1) Results of ▇▇▇▇▇’▇ Operations which corresponds to such Annual Report (in so far as they are positive), minus (2) the amount of Results of ▇▇▇▇▇’▇ Operations (in so far as they are positive), that were utilized pursuant to section (A) and only if the amount of section (1) refers to the operation performance of ▇▇▇▇▇ which corresponds to the 2003 Annual Report, and if a sum of eleven million dollars (US$11,000,000) of Results of Operations of ▇▇▇▇▇ which correspond to such 2003 Annual Report was used pursuant to clause (A)(II), minus (3) an equivalent amount to the lower of (x) the Results of Operations of ▇▇▇▇▇ which correspond to such 2003 Annual Report (in so far as they are positive), minus eleven million dollars (US$11,000,000) and (y) ten million dollars (US$10,0000,000).
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(II) On June 30, 2004 and the one hundredth and twentieth day (120th), which follows the last day in the Annual Report 2004 and the Annual Report 2005, ▇▇▇▇▇ will pay in advance the outstanding capital balance of the Debt with the Republic in an amount equivalent to twenty five per cent (25%) of the amount equal to: (1) Results of ▇▇▇▇▇’▇ Operations which correspond to such Annual Report (in so far as they are positive), minus (2) the amount of such Results of ▇▇▇▇▇’▇ Operations (in so far as they are positive), that were utilized pursuant to section (A) and only if the amount of section (1) refers to Results of ▇▇▇▇▇’▇ Operations which correspond to the 2003 Annual Report, and if a sum of eleven million dollars (US$11,000,000) of Results of ▇▇▇▇▇’▇ Operations which corresponds to such 2003 Annual Report was used pursuant to clause (A)(II), minus (3) an equivalent amount to the lower of (x) the Results of ▇▇▇▇▇’▇ Operations which correspond to such 2003 Annual Report (in so far as they are positive), minus eleven million dollars (US$11,000,000) and ten million dollars (US$10,0000,000).
(III) In the one hundredth and twentieth day (120th) following the last day of each Annual Report that ended after December 31, 2005, ▇▇▇▇▇ will pay in advance the outstanding capital balance of Debt with the Republic equivalent to thirty per cent (30%) of an amount equal to: (1) Results of ▇▇▇▇▇’▇ Operations which correspond to the Annual Report (as long as they are positive) minus (2) the amount of Results of ▇▇▇▇▇’▇ Operations utilized according to section (A); and
(IV) On June 30, 2004 and in the one hundredth and twentieth day (120th) following the last day of the Annual Report that ends after December 31, 2003, YLOPA will participate in the Results of ▇▇▇▇▇’▇ Operations (positive or negative) in an equivalent amount of (1) 41, 811% of the amount equivalent to (x) Results of ▇▇▇▇▇’▇ Operations which corresponds to the Annual Report, minus (y) the amount of such Results of ▇▇▇▇▇’▇ Operations utilized in accordance to section (A) and only if the amount (x) refers to the Results of ▇▇▇▇▇’▇ Operations corresponding to the 2003 Annual Report, and if an amount equivalent to eleven million dollars (US$11,000,000) of the Results of ▇▇▇▇▇’▇ Operations which correspond to the 2003 Annual Report based on the already established in Clause (A)(II) was utilized, minus (z) an equal amount to the lower of (a) Results of ▇▇▇▇▇’▇ Operations in the 2003 Annual Report, minus eleven million dollars (US$11,000,000) and (b) ten million dollars (US$10,000,000) minus (2) 59.73% of the aggregate amount of dividends in cash that need to be paid by ▇▇▇▇▇ to its stockholders according to the applicable legislation (x) in that Annual Report and (y) in all of the previous Annual Reports in the same way that the amount of such paid dividends in the previous Annual Reports would not have been applied according to the calculations in this section (IV) in order to reduce the sum that would have been paid under any other title according to this section (IV) in any of the previous Annual Reports.
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3.2. Limitations of participation in the Results of ▇▇▇▇▇’▇ Operations that are negative. It is understood that the participation of YLOPA in the Results of ▇▇▇▇▇’▇ Operations that are negative will be limited to a maximum of six hundred thousand dollars (US$600,000) per year.
Fourth Clause
Determination of the operation performance of ▇▇▇▇▇ (positive or negative)
The one hundredth and twentieth (120th) day following the end of each Annual Report (beginning with the Annual Report that ended in December 31, ▇▇▇▇), ▇▇▇▇▇ will send TO YLOPA (i) a copy of the annual financial statements of ▇▇▇▇▇ that correspond to the Annual Report prepared in accordance to GAAP Venezuelan, which will have a general balance, statement of profit and losses and cash flows, accompanied by the opinion of an audit company of international standing, and (ii) a complete copy of the Certificate with respect to the Annual Report, duly certified by the Financial Director of ▇▇▇▇▇, which will constitute the definitive document to be utilized to determine the Results of ▇▇▇▇▇’▇ Operations for such Annual Report (positive or negative).
Fifth Clause
Payment of the Results of ▇▇▇▇▇’▇ Operations (positive or negative)
5.1. Payment of Positive Results to YLOPA.
(a) subject to paragraph (b) of the present Clause 5.1, in case that the Results of ▇▇▇▇▇’▇ Operations for an Annual Report (beginning with the Annual Report that ended in December 31, 2003) are positive, then ▇▇▇▇▇ would have pay to YLOPA the percentage that corresponds to YLOPA in the positive Results of ▇▇▇▇▇’▇ Operations of the applicable Annual Report in accordance with Clause 3, (i) on June 30, 2004, if the Annual Report corresponds to 2003, or (ii) the one hundredth and twentieth day (120th) following the last day of the Annual Report, if such Fiscal Year corresponds to a year after 2003.
(b) In case that an event of default takes place and is continuing according to the Contract of ▇▇▇▇▇’▇ Banking Debt or to the Contract of Debt with the Republic, the entire sum that ▇▇▇▇▇ should have paid according to this Agreement will be desposited by ▇▇▇▇▇ in a segregated account of ▇▇▇▇▇ and will not be withdrawn or paid according to this Agreement unless (i) the default had been cured or waived pursuant to the terms of the Contract of ▇▇▇▇▇’▇ Banking Debt or to the Contract of Debt with the Republic, as applicable, within fifteen (15) days of said amount becoming payable pursuant to this Agreement and (ii) have passed at least thirty days (30) days since the date when the default was cured or waived (as long as during that period there are no other defaults), in which case the payments will be freed and paid according to this Agreement.
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5.2. Payment of Negative Results to ▇▇▇▇▇. In case that the Results of ▇▇▇▇▇’▇ Operations during the Annual Report (starting with the Annual Report that ends on December 31, 2003) are negative, then YLOPA will have to pay the percentage that corresponds to YLOPA in the Results of ▇▇▇▇▇’▇ Operations during that Annual Report according to Clause 3 (and subject to the limitations established in that Clause) (i) On June 30, 2004, if such Annual Report correspond to 2003, or (ii) the one hundredth and twentieth day (120th) following the last day of the previously mentioned Annual Report, if this Fiscal Year corresponds to a year after 2003. It is expressly agreed among the Parties that YLOPA will have the right to offset the amounts owed pursuant to this Clause against any amounts owed to YLOPA by ▇▇▇▇▇.
Sixth Clause
Miscellaneous
6.1. Term. The present Agreement will become effective starting on the Closing Date of the contract and (with the exception of the following paragraph) will remain effective until the earlier of December 31, 2016 or until the last day of the Annual Report immediately following the Annual Report during which the last payment of the Debt with the Republic is made consequently, YLOPA will participate in the Results of ▇▇▇▇▇’▇ Operations (positive or negative) until (and including) the Annual Report ending on December 31, 2016 or until the Annual Report preceding the Fiscal Year when the last payment of the debt with the Republic is made, whichever occurs first.
It is understood that the present Agreement will terminate automatically when Consorcio Siderúrgico Amazonia (“Amazonia”) is no longer a stockholder of ▇▇▇▇▇ or the Stockholders of Amazonia (as defined in the “Sponsors Undertaking and Negative Pledge Agreement” dated March 31, 2003) are no longer stockholders of Amazonia as a result of the execution of any guarantee constituted in relation to ▇▇▇▇▇’▇ stocks or Amazonia’s stocks conforming to any of the security agreements over such stocks which will be executed on the Closing Date, and starting from that date neither ▇▇▇▇▇ nor YLOPA will have any right or obligation in relation to this Agreement.
Even in the case of termination or expiration, YLOPA has no right to the restitution of any contribution made in accordance with the Second Clause of this Agreement.
6.2. Payments. All payments contemplated in this Agreement will be made exclusively in dollars, without giving effect to any exchange restriction, and exclusively in the United States of America. All of the payments that ▇▇▇▇▇ must make to YLOPA will have to be credited in the following YLOPA account: ▇▇ ▇▇▇▇▇▇ Chase Bank, ABA ▇▇▇▇▇▇▇▇▇, Beneficiary: Ylopa Serviços de Consultadoria Lda. Account # 400950839; which account may be changed by YLOPA through written notice to ▇▇▇▇▇. All of the payments that YLOPA must make to ▇▇▇▇▇ will be credited in the account that ▇▇▇▇▇ indicates. In the case that ▇▇▇▇▇ could not obtain dollars as a result of any possible exchange restriction or prohibition, ▇▇▇▇▇ will deliver to YLOPA, at
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▇▇▇▇▇’▇ expense, and as long as it does not violate Venezuelan law, a number of Venezuelan securities denominated in dollars that are liquid and available in the local Venezuelan market or any other public or private debt certificate or liquid capital valued in dollars in the U.S., such as, that once YLOPA sells these securities the net funds derived from those sales are equal to the amount in dollars that are owed according to the present Agreement. Nevertheless, any debt of any of the Parties in relation to the present Agreement will not be considered paid until the creditor of that debt has received sufficient dollars as a result of the sale of the securities or as a result of the total payment of that debt in a manner contemplated under this Agreement. Any current or future taxes, rates, contributions, retentions, and other taxes will be entirely paid by ▇▇▇▇▇. All of the payments made by ▇▇▇▇▇ to YLOPA must be made without any deductions, retentions or other charges of any nature. In the case that ▇▇▇▇▇ would be required by law to make any deductions, retention and/or charges, it will gross-up any amounts so deducted or retained so that YLOPA will not be affected by the deductions, retentions, and/or charges.
6.3. Notices. Notices in connection with the present Agreement will be valid if made in writing and sent to the following addresses:
(a) Sidor: Siderúrgica del Orinoco (SIDOR), C.A., Edipuo General, Piso ▇, ▇▇. ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇. To the attention of the Financial Director (with a copy to the Director of Legal Matters).
(b) YLOPA: YLOPA – SERVIÇOS DE CONSULTADORIA LDA., Av. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, Fax: ▇▇-▇▇-▇▇▇▇-▇▇▇▇. To the attention of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
Any party may modify its address for notices through communication in writing to the other party. Nevertheless, until such change has not been notified, the address for notices will continue to be the same.
6.4. Equivalent currency in bolivars. Solely for purposes of article 117 of the Venezuelan Central Bank law, the bolivar equivalent currency for all of the quantities expressed in this contract will be in dollars at the official exchange rate of six hundred bolivars for each dollar (bolivars 1600/US$1).
6.5. Assignment. It is agreed that YLOPA may transfer, assign or delegate this Agreement, as well as the rights and obligations derived from such, totally or partially, through notification to ▇▇▇▇▇ of such assignment in writing. ▇▇▇▇▇ will not be able to transfer, delegate, or assign this Agreement or the rights and obligations derived from it, without YLOPA’s previous consent.
6.6. Whole Agreement. The present Agreement constitutes the totality of the agreement and understanding among the parties with respect to the present object and replaces any previous agreement and understanding among the parties with respect to the matters covered by it.
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6.7. Amendments. The present Agreement and its terms may be modified only by writing and with the signature of all of the parties.
6.8. Governing Law. The present Agreement is ruled by the laws of the Bolivarian Republic of Venezuela.
6.9. Dispute Resolution; Arbitration. Any controversy that arises from this contract or that has any relation to it or with its effects, validity, interpretation or execution, will be resolved through arbitration pursuant to the Rules of Arbitration of the International Chamber of Commerce (ICC) in effect as of the date of this Agreement (the “ICC Rules”), by three arbitrators appointed in accordance to the ICC Rules. The language used during the arbitration will be Spanish and its location will be the city of Miami, Florida, in the United States of America. The citations and notifications that need to be carried out in relation to the arbitration will be carried out in the manner and at the addresses indicated in Clause 6.3 of this Agreement. The parties agree that, at any moment before the arbitration tribunal is constituted, they will be able to request interim protective measures from any competent judicial authority; it being understood that such right does not in any way impair the parties’ agreement to arbitrate all disputes. The parties specifically renounce the right to appeal against any arbitral award that is dictated in the arbitration, which could be either an interim or a final judgment.
Two copies of this contract are executed, of the same tenor and purpose, in Caracas, on June 20, 2003.
▇▇
| ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇), C.A. | ||
| [Signature] | ||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| Title: | Executive President | |
| [Signature] | ||
| Name: | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
| Title: | President of the Joint Directive | |
| YLOPA – SERVICIOS DE CONSULTORIA LDA. | ||
| [Signature] | ||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Title: | Representative | |
| [Signature] | ||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| Title: | Representative | |
▇▇
| ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇), C.A. | ||
| [Signature] | ||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| Title: | Executive President | |
| [Signature] | ||
| Name: | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
| Title: | President of the Joint Directive | |
| YLOPA – SERVICIOS DE CONSULTORIA LDA. | ||
| [Signature] | ||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Title: | Representative | |
| [Signature] | ||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| Title: | Representative | |
13
Annex A of
Certificate
, acting in my capacity of Financial Director of Siderúrgica del Orinoco (▇▇▇▇▇), C.A., a company constituted and located in Caracas (the “Company”), and not in my personal capacity, pursuant to the Fourth Clause of the Participation Agreement between the Company and the Corporacion Venezolana de Guayana on June , 2003 and the Fourth Clause of the Participation Agreement between the Company and Ylopa – Serviços de Consultadoria Lda. on June , 2003 (both referred herein as the “Contract”), I hereby certify in representation of the Company that the Results of ▇▇▇▇▇’▇ Operations corresponding to the fiscal year that ended on December 31, 20 , calculated in conformity with the terms of the contract, are [positive][negative] and ascending to American dollars (US$ ). Enclosed in the present certificate are the calculations performed by the Company in order to determine such Results of ▇▇▇▇▇’▇ Operations. Terms in capital letters used and not defined in the present certificate will carry the meaning assigned to it in the Contracts
Certificate issued on , 2 .1
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| Name: |
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| Title: | Financial Director | |
| 1 | To be sent within 120 days following the culmination of every Annual Report. |
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Annex B of
Certificate of Participation
Certificate of Participation ▇▇. ▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇) C.A.
Share Capital bs. 318,267,100,000
The present certificate, issued to YLOPA – SERVIÇOS DE CONSULTADORIA LDA. (the “Holder”), represents the rights of the Holder derived from the Participation Agreement executed on June , 2003 between Siderúrgica del Orinoco (▇▇▇▇▇) C.A. (the “Company”) and the Holder, and to the contribution to the participating account by the Holder of a credit against the Company for six million six hundred thousand American dollars (US$6,600,000), in accordance with the terms of the Second Clause of said Contract.
The capital of the company is three hundred and eighteen thousand two hundred and sixty seven million one hundred thousand bolivars. (Bolivars 318,267,100,000)
The term of the Company is fifty (50) years, counting since June 25, 1999.
The Ordinary Assembly of Stockholders will meet within the next three (3) months following the termination of every fiscal year.
The Constitutive Act and the Articles of Association of the Company were initially inscribed in the Commercial Register of the Judicial Jurisdiction of the Federal District and Miranda State, on April 1, 1964, under number 86, Volume 13-A, as it was published in the Municipal Gazette of the Federal District number 11.256 on April 8, 1964.
Caracas, June 20, ▇▇▇▇
| ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇), C.A. | ||
|
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| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| Title: | Executive President | |
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| Name: | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
| Title: | President of the Joint Directive | |
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ADDENDUM TO THE
▇▇▇▇▇/YLOPA
PARTICIPATION AGREEMENT
Between YLOPA- SERVIÇOS DE CONSULTADORIA LDA, a company with offices in Portugal (“YLOPA”), represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇, of Argentinean nationality and of legal age, resident of Buenos Aires, Argentina, carrying passport number O8362743, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, of Argentinean nationality and of legal age, resident in Buenos Aires, Argentina, carrying passport number ▇▇▇▇▇▇▇▇▇, duly authorized for this agreement, on the first part; and on the second part, SIDERÚRGICA DEL ORINOCO (▇▇▇▇▇), C.A., commercial corporation registered under the commercial record of the Judicial District of the Federal District of Miranda, on April 1, 1964, under Number 86, Volume 13-A, published in the Municipal Gazette of the Federal District no. 11.256, dated April 8, 1964 (henceforth, “▇▇▇▇▇”), represented in this agreement by its Executive President, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, of legal age and of Argentine nationality, carrying Identity Document E-82.279.736, and by the President of its Executive Board, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, of legal age and of Venezuelan nationality, carrying Identity Document number 1.728.678, duly authorized for this agreement by the Board of Directors of ▇▇▇▇▇ in their meeting of September 30th, 2003, it has been agreed to carry out this addendum (“Addendum”) to the Participation Agreement between YLOPA and ▇▇▇▇▇, dated June 20th, 2003 (the “Contract”).
PRELIMINARY CONSIDERATIONS
WHEREAS, on June 20th, 2003, YLOPA and ▇▇▇▇▇ entered into the Contract.
WHEREAS, YLOPA and ▇▇▇▇▇ have agreed to amend the Contract under the terms established in this Addendum.
In virtue of the foregoing, the parties enter into this Addendum, which modifies the Contract in the terms established in the present documents.
FIRST CLAUSE: DEFINITIONS
Capitalized terms that are not defined in this Addendum shall have the meaning attributed to them in the Contract.
SECOND CLAUSE: AMENDMENTS TO THE CONTRACT
By means of this Addendum, YLOPA and ▇▇▇▇▇ agree to amend the Contract in the following manner:
(a) The following new definitions are added, in alphabetical order, to the First Clause of the Contract:
“Contract of the New Indebtedness with EDELCA” is the contract (as amended) entered into between ▇▇▇▇▇ and C.V.G. Electrificación del Caroní, C.A. (EDELCA) dated June 18th, 2003, in accordance with which Indebtedness in the amount of Twenty Million Dollars (US$20.000.000) by ▇▇▇▇▇ to EDELCA was reprogrammed.
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“Semi-annual Fiscal Period” means, for any year, the period initiating on January 1st and ending on June 30th, both dates inclusive, and the period initiating on July 1st and ending on December 31st, both dates inclusive.
“Distribution Date” is (a) September 30th, 2003, or (b) the date that is no later than the tenth Business Day following the date on which ▇▇▇▇▇ receives from the Exchange Administration Commission (CADIVI) the authorization to acquire currencies and the authorization to liquidate currencies necessary to make the payments established in Clause 5.1(a)(i) of this Contract, whichever is later.
“Applicable Amount for Results of ▇▇▇▇▇’▇ Operations” has the meaning attributed to it in Clause 3.1(B) of this Contract.
“Applicable Period” has the meaning attributed to it in Clause 3.1(B) of this Contract.
(b) The following text substitutes and leaves without effect the definition of “Working Capital” contained in the First Clause of the Contract.
“Working Capital” means with regard to each period the result from (a) the change in current assets (excluding cash and negotiable instruments) for said period, minus (b) the change in current liabilities (excluding short-term maturing dates of long-term Indebtedness) for said period, plus (c) the change for said period in the Capital Expenses used for replacements and inventories included in the fixed assets, including, without limitation, lamination cylinders.
(c) The First Clause of the Contract is modified by this Addendum through the inclusion of the following paragraph at the end of said First Clause:
When, in this Contract, reference is made to a contract, accord, agreement or document, said reference will encompass all modifications, addenda, additions and amendments to said contract, accord, agreement or document that may be agreed upon from time to time.
(d) The following text substitutes and leaves without effect the definition of “Results of ▇▇▇▇▇’▇ Operations” contained in the First Clause of the Contract:
“Results of ▇▇▇▇▇’▇ Operations” means, with regards to ▇▇▇▇▇ and any period, the positive or negative sum (determined in a consolidated manner in accordance with Venezuelan GAAP and calculated in Bolívars and subsequently converted to Dollars at the Average Exchange Rate of said period), without duplication, of: (a) consolidated EBITDA of said period,
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minus (b) as long as it has not been previously deducted when calculating EBITDA, the total amount actually paid by ▇▇▇▇▇ in cash during said period with regards to the Capital Expenses (excluding expenses financed with the funds arising from the incurring of Indebtedness or from any issuing of Securities); plus(minus) (c) decreases (or increases) in the consolidated Working Capital for said period; plus (d) as long as it has not been previously included in the calculation of EBITDA, the aggregate amount of all tax refunds in cash received by ▇▇▇▇▇ during said period, minus (e) (i) the aggregate amount of all the optional advance payments of the Indebtedness allowed in accordance with the Contract of Debt with the Republic effected during said period and (ii) the aggregate amount of all the regularly programmed payments of interest from the Indebtedness allowed in accordance with the Contract of Debt with the Republic effected during said period (except with respect to any revolving credit facility as long as an equivalent reduction is not produced in the commitments under said facilities) including banking and similar commissions, with the understanding that with respect to each period between July 1st, 2003 and December 31st, 2003 (inclusive), and the period between January 1st, 2004 and June 30th, 2004 (inclusive), neither the total nor portion whatsoever of the amounts distributed by ▇▇▇▇▇ on the Date of Distribution as capital or interests as established in the Contract of Debt with the Republic, in the Contract of ▇▇▇▇▇’▇ Banking Debt and in the Contract of the New Indebtedness with EDELCA will be deducted in accordance with this sub-clause (e), minus (f) in the event that default should occur, and continue, on the Contract of Debt with the Republic, the aggregate amount of the capital and programmed interest payments that are overdue and unpaid, minus (g) as long as it has not been previously deducted when calculating EBITDA, the aggregate amount of all the cash payments for labor indemnifications for severance of personnel and pension funds actually made by ▇▇▇▇▇ during said period, minus (h) the aggregate amount of all the taxes on the rent actually paid in cash by ▇▇▇▇▇ during said period, minus (i) the aggregate amount of all taxes on assets in effect actually paid by ▇▇▇▇▇ during said period, minus (j) the aggregate amount of all tax withholdings effectively paid by ▇▇▇▇▇ in cash during said period, minus (k) the aggregate amount of all the restructuring payments effectively paid in cash by ▇▇▇▇▇ during said period, minus (l) the aggregate amount of all the cash payments actually made by ▇▇▇▇▇ to Amazonia during said period in accordance with the Contract of reimbursement of expenses valid on the Closing Date and the aggregate amount of payments effectively made by ▇▇▇▇▇ to Amazonia in accordance to Clause 10.21 of the Contract of Debt with the Republic for the payment of certain operating, legal and tax expenses incurred by Amazonia, minus (m) the amount required to ensure that the final available cash (excluding the aggregate amount of Results from ▇▇▇▇▇’▇ Operations (as long as they are positive), if there were any, with respect to any previous Fiscal Years or Semi-Annual Fiscal Periods, that has been deposited in the account mentioned in Clause 5.1(b) of this Contract and of the Account Participation Agreement with Ylopa), after having given effect pro forma to the payment of the Results from ▇▇▇▇▇’▇ Operations to the Participants (if the Results from ▇▇▇▇▇’▇ Operations to the Participants were positive), will be twenty million (US$20.000.000).
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(e) The text below substitutes and leaves without effect Section 3.1 contained in the Third Clause of the Contract:
3.1 Participation of Ylopa. Subject to the terms of Clause 3.2, YLOPA will have the right to participate in Results from ▇▇▇▇▇’▇ Operations (positive or negative) under the following terms and conditions:
| (A) | YLOPA will participate in Results from ▇▇▇▇▇’▇ Operations corresponding to the Semi-Annual Fiscal period initiated January 1st, 2003 and ended June 30th, 2003, both dates inclusive, in an amount equal to Forty Three Million, Seven Hundred and Nine Thousand Five Hundred and Eighty Five Dollars with Thirty Three Cents of a Dollar (US$43,609,585.33). |
| (B) | In the event that any of the Tranche A Loans is outstanding, and that all programmed payments of the capital of the Tranche A loans payable on the Payment Date (as defined in the Contract of ▇▇▇▇▇’▇ Banking Debt) of June 30th 2004 have been paid, as well as all interests on said amounts up to said date, in accordance with the Contract of ▇▇▇▇▇’▇ Banking Debt: |
| (I) | (A) Not prior to February 15th, 2004, and not after June 30th, 2004, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations for the period beginning July 1st, 2003 and ending December 31st, 2003, both dates inclusive, minus US$10.000.000; (B) on August 15th, 2004, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations for the period beginning January 1st, and ending June 30th, 2004, both dates inclusive, minus US$10.000.000; (C) not prior to February 15th, 2005, and not after June 30th, 2005, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations for the period beginning July 1st, 2004 and ending December 31st, 2004, both dates inclusive; and (D) on the hundred-and-twentieth (120th) day following the last day of the 2005 Fiscal Year, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations for the 2005 Fiscal Year (each one of the amounts described in sub-clauses (A) through (D) above, an “Applicable Amount of Results from ▇▇▇▇▇’▇ Operations” and each of the periods described in sub-clauses (A) through (D) above, the “Applicable Period”), in each case in the following manner and as long as ▇▇▇▇▇ has sent the Certificate corresponding to said Applicable Period in accordance with Clause 4 of this Contract: |
| (1) | 5% of the Applicable Amount of Results from ▇▇▇▇▇’▇ Operations (if positive) will be used to prepay the capital payments of the Tranche A Loans in inverse order of their expiration. |
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| (2) | 25% of the Applicable Amount of Results from ▇▇▇▇▇’▇ Operations (if positive) will be used to prepay the capital payments of the Indebtedness with the Republic. |
| (3) | YLOPA will participate in the Results from ▇▇▇▇▇’▇ Operations (positive or negative) in an amount equivalent to (x) 41.811% of the Applicable Amount of Results from ▇▇▇▇▇’▇ Operations minus (y) 59.73% of the aggregate amount of cash dividends that according to the applicable legislation must be paid by ▇▇▇▇▇ to its shareholders during said Applicable Period, and in past Applicable Periods, Fiscal Years or Semi-Annual Fiscal periods, as long as the amounts from said dividends paid in said past Applicable Periods, Fiscal Years and/or Semi-Annual Fiscal periods have not been applied in accordance with the calculations of this sub-clause (3) to reduce the amounts that would have in any other way been paid in accordance with this sub-clause (3) in any of said past Applicable Periods, Fiscal Years or Semi-Annual Fiscal periods. |
| (II) | On the hundred-and-twentieth (120th) day following the last day of the Fiscal Year that ends December 31st, 2006 and on the hundred-and-twentieth (120th) day following the last day of each subsequent Fiscal Year, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations corresponding to said Fiscal Year, in each case in the following manner indicated, as long as ▇▇▇▇▇ has sent the Certificate corresponding to said Fiscal Year in accordance with the provisions of Clause 4 of this Contract: |
| (1) | 30% of the Results from ▇▇▇▇▇’▇ Operations (if positive) will be used to prepay the capital payments of the Indebtedness with the Republic. |
| (2) | YLOPA will participate in the Results from ▇▇▇▇▇’▇ Operations (positive or negative) in an amount equivalent to (x) 41.811 % of the Applicable Amount of Results from ▇▇▇▇▇’▇ Operations minus (y) 59.73% of the aggregate amount of cash dividends that according to the applicable legislation must be paid by ▇▇▇▇▇ to its shareholders during said Fiscal Year or in past |
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| Fiscal Years or Semi-Annual Fiscal periods, as long as the amounts from said dividends paid in said Fiscal Years and/or Semi-Annual Fiscal periods have not been applied in accordance with the calculations of Section 3.1(B)(I)(3) or this sub-clause (2) to reduce the amounts that would have in any other way been paid in accordance with Section 3.1(B)(I)(3) or this sub-clause (2) in any of said past Fiscal Years or Semi-Annual Fiscal periods. |
(f) The following text substitutes and leaves without effect the Fourth Clause of the Contract.
CLAUSE FOUR
Determination of Results from ▇▇▇▇▇’▇ Operations (positive or negative)
As soon as possible and in any event within the 120 days following the culmination of each Fiscal Year that ends after 2004 and after the culmination of Semi-Annual Fiscal Periods that end on December 31st, 2003, June 30th, 2004 and December 31st, 2004, ▇▇▇▇▇ will send to YLOPA (i) a copy of ▇▇▇▇▇’▇ financials corresponding to said Fiscal Year or Semi-Annual Fiscal period, as the case may be, prepared in accordance with Venezuelan GAAP, which will contain a balance sheet, profit and loss and cash flow analysis, accompanied in the case of financials corresponding to a Fiscal Year by the opinion of an auditing firm of international prestige, and (ii) a complete copy of the Certificate with respect to said Fiscal Year or Semi-Annual Fiscal Period, duly signed by the Financial Director of ▇▇▇▇▇, which will constitute the definitive document that will be used to determine the Results from ▇▇▇▇▇’▇ Operations for said Fiscal Year or Semi-Annual Fiscal period (positive or negative).
(g) The following text substitutes and leaves without effect the Sections 5.1 and 5.2 contained in the Fifth Clause of the Contract:
5.1 Payment of Positive Results to YLOPA.
(a) (i) ▇▇▇▇▇ will pay YLOPA its share in the Results from ▇▇▇▇▇’▇ Operations corresponding to the Semi-Annual Fiscal period begun on January 1st, 2003 and ended June 30th 2003, both dates inclusive, as indicated in Clause 3.1(a), on the Distribution Date. (ii) Subject to the provisions of paragraph (b) of this Clause 5.1, in the event that the Results from ▇▇▇▇▇’▇ Operations contemplated in Clause 3.1 (B) are positive, ▇▇▇▇▇ will pay YLOPA the percentage that it is entitled to in accordance to the provisions of said Clause 3.1(B), and on the same date that the payments are made to the BANDES described in said Clause 3.1(B).
(b) In the event that an event of default should occur and continue with respect to the Contract of ▇▇▇▇▇’▇ Banking Debt or the Contract of Debt with
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the Republic, all of the amounts that ▇▇▇▇▇ should pay in accordance with this Contract will be deposited by ▇▇▇▇▇ in a segregated ▇▇▇▇▇ account and will not be retired from said account nor paid in accordance with this contract unless (i) said non-compliance has been cured and/or waived in accordance with the terms of the Contract of ▇▇▇▇▇’▇ Banking Debt or the Contract of Debt with the Republic, whatever the case, within the fifteen (15) days following the date on which said amounts became due in accordance with this Contract and (ii) at least thirty (30) days have gone by from the date on which said non-compliance has been cured and/or waived (as long as during said period there has been no other instance of non-compliance), in which case said payments will be liberated and paid in accordance with the present Contract.
5.2 Payment of Negative Results to ▇▇▇▇▇. In the event that the Results from ▇▇▇▇▇’▇ Operations of the Semi-Annual Fiscal Periods ending on December 31, 2003, June 30, 2004 and December 31, 2004 or of an Fiscal Year that ends after 2004 are negative, YLOPA will pay ▇▇▇▇▇ the percentage that YLOPA is entitled to in the Results from ▇▇▇▇▇’▇ Operations in said Semi-Annual Fiscal period or Fiscal Year in accordance to Clause 3 (and subject to the limitations established in said Clause) on the dates indicated in said Clause 3. It is expressly agreed by the Parties that YLOPA will have the right to compensate totally or partially and in full right the amounts that it must pay to ▇▇▇▇▇ in accordance with this Clause along with any other debts that YLOPA may have against ▇▇▇▇▇.
THIRD CLAUSE: TERM AND EFFECT.
3.1 This Addendum will become effective starting on the date on which the Addendum of the Contract of Debt with the Republic, dated October , 2003 becomes effective.
3.2 The Contract, as amended by this Addendum, is and will continue to be in effect and is confirmed and ratified in all its aspects by this Addendum.
3.3 Except by special disposition in contradiction of this Addendum, the signing, execution and term of this Addendum will not constitute and cannot be interpreted as a surrender of any right, action or power of YLOPA under the Contract, nor of any sort of termination of the Contract.
FOURTH CLAUSE: APPLICABLE LAW.
This Addendum will be ruled and interpreted in its entirety in accordance with the laws of the Bolivarian Republic of Venezuela.
FIFTH CLAUSE: APPLICABLE JURISDICTION.
For all matters relative to the interpretation and enforcement of this Addendum, the parties submit irrevocably and unconditionally to the exclusive jurisdiction and competence of the courts of the Bolivarian Republic of Venezuela, expressly surrendering any other forum to which they have the right or may have future rights, in virtue of their domicile or any other reason.
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Two (2) copies are made of the same tenor and to the same effect in the city of Caracas at 15 days of the month of October, two thousand and three (2003).
| YLOPA – SERVICIOS DE | SIDERÚRGICA DEL ORINOCO, | |||||||
| CONSULTADORIA LDA | C.A. (▇▇▇▇▇) | |||||||
| [Signature] |
[Signature] | |||||||
| By: | YLOPA | By: | ▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇ | Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||||
| Charge: | Agent | Charge: | Executive President | |||||
| [Signature] |
[Signature] | |||||||
| By: | YLOPA | By: | ▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | Name: | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||||
| Charge: | Agent | Charge: | President of the Board | |||||
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Annex A to the Contract of Participating Accounts
Certificate
, acting in my capacity as Financial Director of Siderúrgica del Orinoco (▇▇▇▇▇), C.A., a company constituted and with offices in Caracas (the “Company”), and not in my own name, in accordance with that established in the Fourth Clause of the Participating Accounts Contract between the Company and Ylopa – Serviços de Consultadoria Lda dated June 20th, 2003, as amended, and in the Fourth Clause of the Participating Accounts Contract between the Company and the Corporación Venezolana de Guayana (CVG) dated June 20th, 2003 as amended (both referred to as the “Contracts”), through this document certify in the name and representation of the Company that the Results from ▇▇▇▇▇’▇ Operations corresponding to the [Fiscal Term that ended on December 31st, 20 ] [Fiscal Term that ended on , 20 ], calculated in accordance with the terms of the Contracts, are [positive] [negative] and amount to Dollars of the United States of America (US$ ). Attached to this certificate I append the calculations carried out by the Company to determine said Results from ▇▇▇▇▇’▇ Operations. Capitalized terms used and not defined in this certificate shall have the meaning assigned to them in the Contracts.
Certificate emitted on , 20 1.
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| Name: |
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| Charge: | Financial Director | |
| 1 | To be sent within 120 days following the end of each Semi-Annual Fiscal Period ending on December 31st, 2003, June 30th, 2004, and December 31st, 2004, and each Fiscal Year. |
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SECOND ADDENDUM TO THE ▇▇▇▇▇/YLOPA
PARTICIPATION AGREEMENT
Between YLOPA- SERVIÇOS DE CONSULTADORIA LDA, company with offices in Portugal (“YLOPA”), represented by its managers ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, of Argentinean nationality and of legal age, resident of Buenos Aires, Argentina, carrying passport number 5.407.623M, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, of Argentinean nationality and of legal age, resident in ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, carrying passport number 5.386.404M, duly authorized for this agreement, on the first part; and on the second part, SIDERÚRGICA DEL ORINOCO (▇▇▇▇▇), C.A., commercial corporation with offices in Caracas, registered under the commercial record of the Judicial District of the Federal District of Miranda, on April 1, 1964, under Number 86, Volume 13-A, published in the Municipal Gazette of the Federal District no. 11.256, dated April 8, 1964 (henceforth, “▇▇▇▇▇”), represented in this agreement by its Executive President, ▇▇▇▇▇▇ ▇▇▇▇▇▇, of legal age and of Argentine nationality, carrying Identity Document E-82.245.711, and by the President of its Executive Board, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, of legal age and of Venezuelan nationality, carrying Identity Document number 1.728.678, duly authorized for this agreement, it has been agreed to carry out this addendum (“Addendum”) to the Participating Accounts Contract between YLOPA and ▇▇▇▇▇, dated June 20th, 2003 (the “Contract”).
PRELIMINARY CONSIDERATIONS
WHEREAS, on June 20th, 2003, YLOPA and ▇▇▇▇▇ entered into the Contract.
WHEREAS, on October 15th, 2003, YLOPA and ▇▇▇▇▇ entered into the first Addendum to the Contract.
WHEREAS, YLOPA and ▇▇▇▇▇ have agreed to amend the Contract under the terms established in this Addendum.
In virtue of the foregoing, the parties enter into this Addendum, which modifies the Contract in the terms established in the present agreement.
FIRST CLAUSE: DEFINITIONS
Capitalized terms that are not defined in this Addendum shall have the meaning attributed to them in the Contract.
SECOND CLAUSE: AMENDMENTS TO THE CONTRACT
By means of this Addendum, YLOPA and ▇▇▇▇▇ agree to amend the Contract in the following manner:
(a) The following new definition is added, in alphabetical order, to the First Clause of the Contract:
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“Fiscal Trimester” means, for any year, the term beginning on January 1st and ending on March 31st, both dates inclusive, the period beginning on April 1st and ending on June 30th, both dates inclusive, the period beginning on July 1st and ending on September 30th, both dates inclusive, and the period beginning on October 1st and ending on December 31st, both dates inclusive.
(b) The definition of “EBITDA” contained in the First Clause of the Contract, is amended by this Addendum through the inclusion of the following phrase at the end of said definition:
“with the understanding, however, that to the effects of the calculation for Excess Cash, Consolidated EBITDA will be determined in a non-consolidated manner.”
(c) The definition of “Results from ▇▇▇▇▇’▇ Operations” contained in the First Clause of the Contract is amended as follows:
(i) The following text substitutes and leaves without effect the heading of the definition of “Results from ▇▇▇▇▇’▇ Operations” contained in the First Clause of the Contract:
“Results from ▇▇▇▇▇’▇ Operations” means, with respect to ▇▇▇▇▇ and any period, the positive or negative sum (determined in a non-consolidated manner in accordance with Venezuelan GAAP and calculated in Bolivars and afterward converted to Dollars at the Average Exchange Rate of said period), and without duplications, of:”
(ii) The following text substitutes and leaves without effect Sub-Clause (a) of the definition of “Results from ▇▇▇▇▇’▇ Operations” contained in the First Clause of the Contract:
“(a) EBITDA of said period, minus,”
(iii) The following text substitutes and leaves without effect Sub-Clause (c) of the definition of “Results from ▇▇▇▇▇’▇ Operations” contained in the First Clause of the Contract:
“(c) reductions (or increases) in the Working Capital for said period; plus”
(iv) The following text substitutes and leaves without effect Sub-Clause (m) of the definition of “Results from ▇▇▇▇▇’▇ Operations” contained in the First Clause of the Contract:
“(m) the amount required to ensure that the final available cash (excluding the aggregate amount of Results from ▇▇▇▇▇’▇ Operations (as long as they are positive), if there were any, with respect to any previous Fiscal Years, Semi-Annual Fiscal Periods, or Fiscal Trimesters, whatever the case, that has been deposited in the account
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mentioned in Clause 5.l(b) of this Contract and of the Participation Agreement with CVG), after having given effect pro forma to the payment of the Results from ▇▇▇▇▇’▇ Operations to the Participants (if the Results from ▇▇▇▇▇’▇ Operations to the Participants were positive), will be Twenty Million Dollars (US$20.000.000).”
(d) The following text substitutes and leaves without effect Sub-Clause (B) of Section 3.1 contained in the Third Clause of the Contract:
(B)
| (I) | (A) Not after November 15th, 2004, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations for the period beginning July 1st, 2004 and ending September 30th, 2004, both dates inclusive; (B) Not after February 15th, 2005, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations for the period beginning October 1st, 2004 and ending December 31st, 2004, both dates inclusive; (C) not after May 15th, 2005, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations for the period beginning January 1st, 2005 and ending March 31st, 2005, both dates inclusive; and (D) not after August 15th, 2005, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations for the period beginning April 1st, 2005 and ending June 30th, 2005, both dates inclusive; (E) not after November 15th, 2005, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations for the period beginning July 1st, 2005, and ending September 30th, 2005, both dates inclusive; (F) not after February 15th, 2006, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations for the period beginning October 1st, 2005, and ending December 31st, 2005, both dates inclusive (each one of the amounts described in sub-clauses (A) through (F) above, an “Applicable Amount of Results from ▇▇▇▇▇’▇ Operations” and each of the periods described in sub-clauses (A) through (F) above, the “Applicable Period”), in each case in the following manner and as long as ▇▇▇▇▇ has sent the Certificate corresponding to said Applicable Period in accordance with Clause 4 of this Contract: |
| (1) | 5% of the Applicable Amount of Results from ▇▇▇▇▇’▇ Operations (if positive) will be used to prepay the capital payments of the Tranche A Loans in inverse order of their expiration, as long as any of the Tranche A Loans is outstanding. |
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| (2) | 25% of the Applicable Amount of Results from ▇▇▇▇▇’▇ Operations (if positive) will be used to prepay the capital payments of the Debt with the Republic, as long as the Debt with the Republic is outstanding. |
| (3) | YLOPA will participate in the Results from ▇▇▇▇▇’▇ Operations (positive or negative) in an amount equivalent to (x) 41,811% of the Applicable Amount of Results from ▇▇▇▇▇’▇ Operations minus (y) 59,73% of the aggregate amount of cash dividends that according to the applicable legislation must be paid by ▇▇▇▇▇ to its shareholders during said Applicable Period, and in past Applicable Periods, Fiscal Years, Semi-Annual Fiscal Periods, or Fiscal Trimesters, as long as the amounts from said dividends paid in said past Applicable Periods, Fiscal Years, Semi-Annual Fiscal Periods and/or Fiscal Trimesters have not been applied in accordance with the calculations of this sub-clause (3) to reduce the amounts that would have in any other way been paid in accordance with this sub-clause (3) in any of said past Applicable Periods, Fiscal Years, Semi-Annual Fiscal Periods, or Fiscal Trimesters. |
| (II) | Not after (a) May 15th, 2006, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations corresponding to the period beginning January 1st, 2006 and ending March 31st, 2006, both dates inclusive; (b) August 15th, 2006, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations corresponding to the period beginning April 1st, 2006 and ending June 30th, 2006, (c) November 15th, 2006, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations corresponding to the period beginning July 1st, 2006 and ending September 30th, 2006, and (d) February 15th, 2007, and not after every February 15th, May 15th, August 15th, and November 15th following, ▇▇▇▇▇ will use an amount equal to the Results from ▇▇▇▇▇’▇ Operations corresponding to the previous Fiscal Trimester, in each case in the following manner indicated, as long as ▇▇▇▇▇ has sent the Certificate corresponding to said Fiscal Year in accordance with the provisions of Clause 4 of this Contract: |
| (1) | 30% of the Results from ▇▇▇▇▇’▇ Operations (if they were positive) will be used to prepay the capital payments of the Debt with the Republic, as long as the Debt with the Republic is outstanding. |
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| (2) | YLOPA will participate in the Results from ▇▇▇▇▇’▇ Operations (positive or negative) in an amount equivalent to (x) 41,811% of the Applicable Amount of Results from ▇▇▇▇▇’▇ Operations minus (y) 59,73% of the aggregate amount of cash dividends that according to the applicable legislation must be paid by ▇▇▇▇▇ to its shareholders during said Fiscal Year, or in past Fiscal Years, Semi-Annual Fiscal Periods, or Fiscal Trimesters, as long as the amounts from said dividends paid in said past Fiscal Years, Semi-Annual Fiscal Periods and/or Fiscal Trimesters have not been applied in accordance with the calculations of sub-clause 3.1(B)(I)(3) or this sub-clause (2) to reduce the amounts that would have in any other way been paid in accordance with this sub-clause (2) in any of said past Applicable Periods, Fiscal Years, Semi-Annual Fiscal Periods, or Fiscal Trimesters. |
(e) The following text substitutes and leaves without effect the Fourth Clause of the Contract:
CLAUSE FOUR
Determination of Results from ▇▇▇▇▇’▇ Operations (positive or negative)
As soon as possible and in any event within the 45 days following the culmination of each Financial Trimester, but at least two (2) Business Days prior to the payment of Results from ▇▇▇▇▇’▇ Operations provided for in Clause 3.1 (B), ▇▇▇▇▇ will send to YLOPA (i) a copy of ▇▇▇▇▇’▇ financials corresponding to said Fiscal Trimester, prepared in accordance with Venezuelan GAAP, which will contain a balance sheet, profit and loss and cash flow analysis, and (ii) a complete copy of the Certificate with respect to said Fiscal Trimester, duly signed by the Financial Director of ▇▇▇▇▇, which will constitute the definitive document that will be used to determine the Results from ▇▇▇▇▇’▇ Operations for said Fiscal Year or Semi-Annual Fiscal period (positive or negative).
(g) The following text substitutes and leaves without effect Section 5.2 contained in the Fifth Clause of the Contract:
5.2 Payment of Negative Results to ▇▇▇▇▇. In the event that the Results from ▇▇▇▇▇’▇ Operations for a Fiscal Trimester are negative, YLOPA will pay ▇▇▇▇▇ the percentage that YLOPA is entitled to in the Results from ▇▇▇▇▇’▇ Operations in said Semi-Annual Fiscal period or Fiscal Year in accordance to Clause 3 (and subject to the limitations established in said Clause) on the dates indicated in said Clause 3. It is expressly agreed by the Parties that YLOPA
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will have the right to compensate totally or partially and in full right the amounts that it must pay to ▇▇▇▇▇ in accordance with this Clause along with any other debts that YLOPA may have against ▇▇▇▇▇.
THIRD CLAUSE. TERM AND EFFECT
3.1 This Addendum will become effective starting on the date on which the Addendum of the Contract of Debt with the Republic, dated October , 2004 becomes effective.
3.2 The Contract, as amended by this Addendum, is and will continue to be in effect and is confirmed and ratified in all its aspects by this Addendum.
3.3 Except by special disposition in contradiction of this Addendum, the signing, execution and term of this Addendum will not constitute and cannot be interpreted as a surrender of any right, action or power of YLOPA under the Contract, nor of any sort of termination of the Contract.
FOURTH CLAUSE: APPLICABLE LAW.
This Addendum will be ruled and interpreted in its entirety in accordance with the laws of the Bolivarian Republic of Venezuela.
FIFTH CLAUSE: APPLICABLE JURISDICTION.
For all matters relative to the interpretation and enforcement of this Addendum, the parties submit irrevocably and unconditionally to the exclusive jurisdiction and competence of the courts of the Bolivarian Republic of Venezuela, expressly surrendering any other forum to which they have the right or may have future rights, in virtue of their domicile or any other reason.
Two (2) copies are made of the same tenor and to the same effect in the city of Caracas at days of the month of , two thousand and four (2004).
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| YLOPA – SERVICIOS DE CONSULTADORIA LDA |
SIDERÚRGICA DEL ORINOCO, C.A. (▇▇▇▇▇) | |||||||
| [Signature] |
[Signature] | |||||||
| Name: | ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||||
| Charge: | Manager | Charge: | Executive President | |||||
| [Signature] |
[Signature] | |||||||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | Name: | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||||
| Charge: | Manager | Charge: | President of the Board | |||||
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Annex B to the Contract of Participating Accounts
Certificate
, acting in my capacity as Financial Director of Siderúrgica del Orinoco (▇▇▇▇▇), C.A., a company constituted and with offices in Caracas (the “Company”), and not in my own name, in accordance with that established in the Fourth Clause of the Participation Agreement between the Company and the Corporación Venezolana de Guayana (CVG) dated June 20th, 2003 as amended, and in the Fourth Clause of the Participation Agreement between the Company and Ylopa – Serviços de Consultadoria Lda dated June 20th, 2003, as amended (both referred to as the “Contracts”), through this document certify in the name and representation of the Company that the Results from ▇▇▇▇▇’▇ Operations corresponding to the [Fiscal Term that ended on December 31st, 20 ] [Semi-Annual Fiscal Term that ended on , 20 ] [Fiscal Trimester that ended on , 20 ], calculated in accordance with the terms of the Contracts, are [positive] [negative] and amount to Dollars of the United States of America (US$ ). Attached to this certificate I append the calculations carried out by the Company to determine said Results from ▇▇▇▇▇’▇ Operations. Capitalized terms used and not defined in this certificate shall have the meaning assigned to them in the Contracts.
Certificate emitted on , 20 .
|
| ||
| Name: |
| |
| Charge: | Financial Director | |
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